Politics

Wisconsin unlikely to create health care exchange

Madison - Gov. Scott Walker signaled Wednesday that Wisconsin likely won't move forward with creating its own online insurance marketplace as called for under President Barack Obama's health care overhaul, leaving that to the federal government.

The Republican governor's decision on the insurance exchange, scheduled to be announced Friday morning, has big potential implications for the state's patients, the health care sector and Walker's own political career.

An odd coalition of business groups, health insurers and Democrats has pressed Walker, an opponent of the Affordable Care Act that is often called Obamacare, to set up state exchanges where small businesses and individuals could buy health insurance.

Yet with tea party conservatives opposed to advancing the law in any way and many guidelines still unissued by the federal government, Walker suggested he wouldn't pursue state-created exchanges in comments to national media at the Republican Governors Association in Las Vegas.

His comments came as President Barack Obama's administration further pushed back a deadline for states to decide, but other high-profile GOP governors signaled their own unwillingness to move forward with exchanges in their states.

"I'd much prefer control at the state level," Walker told The New York Times, "but the problem is, I don't think they are really state-run."

"Why do I want to take on the potential risk to my taxpayers if I don't really have any true authority about what's going to happen?" Walker added.

The governor's latest comments were not a surprise - Walker for a time had sought to set up the exchanges to adapt them to the state's market but had halted work last year. Obamacare opponents will cheer any rejection of a state exchange, but it will be a reality check to supporters of the federal law who were cheered by Obama's re-election last week.

People who do not get affordable health benefits through an employer and businesses with fewer than 50 or 100 employees will be able to buy health insurance through the exchange or outside it as they do now. People with incomes below 400% of the federal poverty threshold - $92,200 for a family of four this year - will be eligible for subsidies tied to their household income, though the subsidies will be much higher for those with lower incomes.

The law leaves dozens of decisions to states that set up their own exchanges. Those decisions will determine whether consumers can easily compare health plans, what plans can be sold on the exchange, what the plans must cover, the cost of the plans and whether the exchange increases competition among health insurers.

For that reason, U.S. Sen.-elect Tammy Baldwin, outgoing Sen. Herb Kohl, U.S. Reps. Ron Kind and Gwen Moore and Congressman-elect Mark Pocan all sent a letter to Walker earlier this week urging him to build a state-run exchange.

Democrats in the Legislature generally agree there should be a state-run exchange, as do patient groups and Wisconsin Manufacturers & Commerce, the National Federation of Independent Business and groups representing the state's health plans, doctors and hospitals. Those groups have noted that officials from Wisconsin will typically be easier for state businesses and consumers to influence than federal officials who must worry about programs across many states.

"I'd rather do it the Wisconsin way, our way. . . . And I'm not alone," Kind said.

Work halted in December

After halting implementation work in December 2011, Walker returned $38 million in federal money that was intended to help with that planning, hoping that the U.S. Supreme Court or voters would deal a blow to the federal law. Instead, the Supreme Court upheld it and voters kept Obama in the White House and the U.S. Senate in the hands of Democrats.

That left the state scrambling to declare by a previous deadline of Friday whether it will seek to set up its own marketplace. But late Thursday the federal Department of Health and Human Services said it would let states wait to decide until a Dec. 14 deadline for turning in detailed plans on the exchanges.

States that do move forward with their own exchange have to get it up and running by October 2013. States have until Feb. 15 to decide whether they want to partner with the federal government on an exchange.

"We are committed to providing states with the flexibility, resources and time they need to deliver the benefits of the health care law to the American people," HHS Secretary Kathleen Sebelius said in a letter Thursday to Republican governors.

Walker spokesman Cullen Werwie said the federal decision Thursday to move back the deadline isn't likely to change what Wisconsin does.

Twenty tea party groups sent Walker a letter Monday saying that an exchange would "obliterate the constitutional liberties" that Walker ought to defend. Nine Republicans who will serve in the next Legislature have gone on the record saying they back a bill to arrest any federal officials who try to implement the health care law in Wisconsin. Walker rejected that step this week, but the proposal shows the pressures he faces from his own party.

If Walker ever faced a competitive Republican primary, either in running for governor or another high office such as U.S. senator or president, having implemented Obamacare in Wisconsin could be a significant liability. The governor also would have to answer at least in part for any problems in implementing the law.

Seventeen states already are moving forward with implementing the federal law.

But Wednesday, Virginia Gov. Bob McDonnell, the head of the Republican Governors Association, and the group's incoming head, Louisiana Gov. Bobby Jindal, sent a letter on behalf of GOP governors to Obama saying that the time frame and many provisions of the federal law are "simply unworkable." The pair put 34 questions to the president on the implementation of the law and said that they needed answers and more time before making their decisions on the exchanges.

"With the pending deadline of Nov. 16 for governors to make a decision on state based health insurance exchanges, we ask you to push back the date until your team has answered the numerous previous questions for governors and other groups," the letter reads.

A question of trust

It's unclear how much the Obama administration and supporters of the law would trust the Walker administration with overseeing an essential component of a law that the governor contends will prove to be a disaster for the state and the country.

"This administration is going to want the first enrollment to go very smoothly, because this will be the first experience millions of people will have with health care reform," said Marianne Udow-Phillips, director of the Center for Healthcare Research & Transformation at the University of Michigan and a former executive with Blue Cross Blue Shield of Michigan.

The Obama administration, she said, prefers that states run their own exchanges but also wants to make sure states have a path to get there.

To meet the deadlines, Wisconsin could draw on some work done by former Gov. Jim Doyle's administration. But the state still would have to put in place a relatively complex grid of information systems that would underpin the exchange and resolve an array of technical details determining how health insurers design and price their plans.

"We can do something," said Barbara Zabawa, a health care lawyer with Whyte Hirschboeck Dudek in Madison. "It is not going to be perfect, and it is going to be a work in progress."

Walker and officials in his administration have contended that the Affordable Care Act will limit consumer choice.

In early 2011, Walker and Dennis Smith, the secretary of the state Department of Health Services, also told The Washington Post that they oppose a fundamental component of health care reform: the requirement that health plans sold in and outside of the exchange cover a basic package of essential benefits.

The Affordable Care Act does require at least some standardization of benefits to make it easier for people and small businesses to compare health plans and imposes a slew of new regulations for health plans.

States will have to follow those regulations, said William Toman, a health care lawyer with Quarles & Brady. "But there is a great deal of flexibility in those," he said.

About Jason Stein

Jason Stein covers the state Capitol and is the author with his colleague Patrick Marley of "More than They Bargained For: Scott Walker, Unions and the Fight for Wisconsin." His work has been recognized by journalism groups such as the American Society of News Editors, the Society of American Business Editors and Writers, and the Association of Capitol Reporters and Editors.